Media Future: Fibre revolution coming to townships

by Arthur Goldstuck (@art2gee) The fibre-to-the-home (FTTH) revolution that has swept suburban South Africa is about to arrive in the country’s townships.

FTTH is this decade’s magic ingredient for high-speed, painless and unlimited internet access. But, until now, it has been the province of the privileged. Only the more-affluent suburbs of South Africa’s cities have been afforded the luxury of the dedicated optical fibre cables that typically run in trenches along leafy sidewalks.

That is about to change.

Low-cost alternative

Vumatel, the company that sparked the FTTH revolution when it won a contract to supply fibre to the suburb of Parkhurst, Johannesburg, is at it again. This time, it plans to connect the townships of South Africa. It has come up with a low-cost alternative to wiring dense suburbs, and intends to offer uncapped high-speed broadband for a mere R89 a month.

To put that in context, the average spend on a cellphone in lower socio-economic segments is typically around R100. Fibre, coupled with in-home wifi, can replace a large chunk of cellular spend by moving voice traffic from the mobile networks to voice over WhatsApp and Facebook Messenger, among others. All data use in the home would move off the expensive data services provided by the mobile operators.

With wide-scale rollout, this could prove immensely damaging to the operators. More significantly and to the point, however, it could prove immensely beneficial to those who have previously been kept away from the largesse of high-speed, unlimited access.

The Vumatel service will offer a 100Mbps download and 10Mbps upload speed, which typically costs more than a R1000 a month in more-affluent suburbs. How is it possible, then, to offer it at a mere R89 a month?

Great deal of commitment

Only with a great deal of commitment to finding an affordable broadband solution for the mass-market.

“We think that the FTTH deployments as we and other operators are doing them are great for the country, because we are moving connectivity forward at a macro level,” says Niel Schoeman, Vumatel CEO. “But it is clearly not addressing the information divide between the less fortunate and the leafy suburbs, and potentially exacerbates inequality in terms of information access. We’ve been trying to come up with a solution to address townships, to provide that abundance of information to residents of townships. We think we can do it by providing it at R89 a month for a 100Mbps uncapped service. We think that is fundamentally different to a 500MB data allocation on a prepaid service, which has been the only kind of option for connectivity.”

Vumatel will initially roll out the service in the Johannesburg township of Alexandra, with an estimated 400 000 residents in the target area. “That is our township equivalent of the announcement that we were connecting Parkhurst. We’re going to give it a go between now and March.”

The question remains: how is such low cost possible on a business level?

Aerial fibre

On the surface, the answer lies in Vumatel’s October 2016 acquisition of Fibrehoods, a provider of aerial fibre similar to overhead telephone lines. However, that in itself would not cut the costs so radically. Until recently, Fibrehoods had also been serving wealthier suburbs.

“Clearly, to make that price point work, we need to work hard at the capital cost of deployment,” says Schoeman. “The topography of townships doesn’t lend itself to the typical buried, trenched solution, so we’ll use aerial fibre.

“The price is possible thanks to a combination of technologies , the potential number of customers per square kilometre, and the fact that it will also be potentially contended up to 20 times, meaning 20 customers will use the same 100Mbps line. So each customer is always guaranteed 5Mbps upward, but the probability of getting more like a 20Mbps service is high. Not everyone will be using the same line at the same time.”

Vumatel will also use its fibre to provide wifi in public spaces in the townships. This service will be possible, partly, thanks to corporate social investment from its 49% shareholder, Investec.
“We’ve looked at a broader wifi deployment model, but we don’t think it creates the abundance that closes the digital gap,” says Schoeman. “You can use the analogy of water: wifi hotspots create wells where people can collect water, whereas, if you provide piped water to homes, you see people growing gardens and using it in an unlimited way. We want to go deep into every home, uncapped, at high speed, and see if we can make a difference.”

“Make the model work”

Unlike the suburban model, where Vumatel lays down the fibre and leaves it to internet service providers (ISPs) to deliver access, it will initially provide access itself. It will piggyback on the Dark Fibre Africa grid that will link it to the broader internet and undersea cables, but will acquire and distribute access and data services itself. “We first want to see if we can make the model work, rather than having to add additional margins for service providers. Our philosophy is always open access so, if it works, we will see if we can let service providers offer innovative services.”

Schoeman believes the eventual fibre market for all service providers will be as much as 35m. He says it will be possible for Vumatel to bring fibre within reach of another 10m people in the next couple of years, at a cost of between R2bn and R3bn.

“We want to see if we can kick off another catalyst event like Parkhurst, and start a storm: to see if we bring abundant connectivity to low-income homes.”

Arthur Goldstuck (@art2gee) heads up World Wide Worx and is editor-in-chief of Gadget, a personal technology magazine. He is a consulting editor to MarkLives.com and our media tech columnist. This article has been republished from Gadget.

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